Maintain short positions. The FKLI repeated its infamous intraday trading pattern of a weak performance in the second half of the session – a phenomenon that has occured several times over the past two weeks. Resuming the afternoon session, the index reached a high of 1,602 pts before tumbling to a low of 1,574 pts and closing at 1,577 pts – a 6-pt drop. The negative intraday price reversal near the round figure of 1,600 pts suggests the re-emergence of selling pressure, following the index’s rebound from the recent low of 1,554 pts. Towards the upside, a deeper rebound may only develop if the index is able to settle above the 1,595-pt resistance, otherwise, the expectation is for the index to continue trending lower within the correction phase’s downtrend channel (as depicted in the chart). We are keeping our negative trading bias.

We recommend traders keep to short positions, which were initiated at 1,598 pts, or the closing level of 21 Jan. To manage risks, a stop-loss can be set above 1,595 pts.

The immediate support is maintained at 1,574 pts, followed by 1,554 pts – the low of 29 Jan. On the upside, the resistance points are kept at 1,588 pts – the high of 2 Feb, followed by 1,595 pts.

Source: RHB Securities Research - 4 Feb 2021